Performance Measurement and Productivity Management in Production Units with Network Structure by Identification the Most Productive Scale Size Pattern

Managers tend to improve resource (input) utilization in organizations to obtain the highest level of productivity. Additionally, many industrial units have multi-stage structure in which the output of one stage is the input of the next one. This paper, for the first time, presents data envelopment analysis (DEA) approaches to achieve the most productivity in two-stage decision making units (DMUs). By considering internal activities in system, radial and non-radial models are proposed to evaluate network DMUs and radial model is developed to identify the most productive scale size (MPSS) pattern. Proposed models are applied to optimize the performance of bank branches as units with two-stage structure. Results show that efficiency scores and improvements needed in costs and paid interests (inputs) to get more incomes and facilities (outputs). This study provides managers with information to propose better strategies to improve not only the overall performance but also the efficiency of each stage.